Question

It is not uncommon in deferred revenue expenditure ___________.

• A. that benefit may last for few years, 3-5 years
• B. that it is an incidental expenditure with heavy amount
• C. it is recurring expenditure
• D. both (A) & (B)

Answer 1

Answer: (D)

both (A) & (B)

Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived from a number of following accounting periods. These expenses are unusually large in amount and, essentially, the benefits are not consumed within the same accounting period.

Features of deferred revenue expenditure are :-

1. Expenditures for developments,improvement and alterations are revenue expenditures but treated as capital expenditure.
2. These expenditures are not immediately written off in the year of actual expenditure but split over a period of certain years as per the decisions and policies of the management.
3. These expenditures are treated as assets and shown at the assets side of balance sheet.
4. It is an incidental expenditure with heavy amount.